Representatives from three Corbin businesses say a recent rate hike for water service are too high and asked members of the City Utility Commission (CUC) last week to roll back the raise, or introduce it in a more gradual manner.
The complaints came during a special called meeting of the Commission last Wednesday.
“The thing I would have to say is why so much at one time?” Corbin Ice Company co-owner Jreg Botner asked members of the Commission. “Did the cost of the water jump up here that much recently?”
CUC Chairman Terry Joe Martin defended the increase, saying businesses were notified well in advance last year by letter, a public hearing on the matter was held, and the intention to raise rates was advertised twice in the newspaper. The Commission also hired R.W. Beck and Associates, a firm that specializes in rate studies for utility companies, to assess the rate structure and propose a workable increase.
“We’ve not just reached and grasped and pulled something out and said we’re going to do this,” Martin said. “There was a lot of research put into it. It’s not something that’s been done overnight … it’s not something any of us wanted to do.”
CUC members voted last October to approve the rate increase, which will raise the average customer’s bill about $7.04 per month. Residential and commercial customers outside the city limits, who already pay higher rates for water, would see about a $4.03 increase on their average bill – from $18.10 to $22.13 per month. Industrial customers inside the city limits went from $56.90 per 5,000 gallons of water to $75.90, a $19 increase. Industries outside the city would see a $27.95 increase per 5,000 gallons.
According to CUC General Manager Ron Herd, the utility was selling water to city customers “below cost,” and subsidizing the losses with higher rates on outside customers. He said audits done for the past several years have pointed to the problem and projected a net loss of $45,000 for 2009 if action wasn’t taken. Water rates for the utility’s customers have been unchanged since 1990.
“Our old rate was the lowest in the state of Kentucky,” Herd said. “It was ridiculously low … we can’t sell to anybody below cost.”
Botner asked the Commission to raise rates over several years on a “tiered” basis to make the increase easier to swallow.
“That’s what makes it tough on us. That’s just a big jump at one time to absorb. I can’t pass that all on [to customers] at one time.”
Under the new rates, the company pays about .15 cents in water costs per seven lb. bag of ice.
Stan Baker, a representative from CTA Acoustics, said his company has “no way” to pass the increased cost of water on to customers because of the competitive nature of the company’s business. CTA manufactures primarily sound dampening insulation sold to auto manufacturers. He estimated the manufacturer would pay an additional $120,000 in water bills this year.
“We’re serious in need of some way to compensate for this,” he said. “We’ve got to figure some kind of way to get rid of this as much as we can.”
Baker tacitly threatened that the company could relocate to another area if the rates weren’t lowered. He said it is common for manufacturing businesses to move to Eastern Europe and Mexico to escape high labor and utility costs.
“Three hundred good manufacturing jobs is a precious commodity that our city should do everything they can do to protect,” he said. “I can’t tell you our objective is to cut and run if this is kept in place. I don’t have that bullet in my gun … I don’t have the a bullet in my gun that says if you repeal it they will stay for 20 years.”
CUC member Wendell Mitchell said even with the increase, the utility is still the ninth cheapest in the state on water rates.
“I’d hate like anything to see the company move, but if you went to a different community I don’t think you’d find one any cheaper than it is here now,” he said.
Martin said the Commission studied giving volume discounts to larger customers, but said the cost of doing so would have to be passed on to smaller customers.
“I’ve got a problem asking them to supplement a corporation that uses more water, electric of other commodities of a utility. We didn’t think it was fair for everyone else to have to supplement the larger users.”
Terry McNeese and Kevin Booth, representatives from Pepsi Cola Bottling Company in Corbin also protested the increases.
Martin said the Commission may revisit the issue at a later date, but no formal action was taken.
In other business, the Commission:
• Voted to revise the resolution passed last year regarding water rate increases. Customers of CUC received bills with the increased rates this month. The utility normally bills for water used two months past.
Board member Chris Hart said he thought the resolution meant that the increases would actually start being calculated as of Jan. 1, 2007 – not reflected on the January bills.
The board also voted to credit customers for the overcharge. The new rates will be reflected on the March bills.